[picapp align=”none” wrap=”false” link=”term=krugman&iid=2819457″ src=”http://view3.picapp.com/pictures.photo/image/2819457/bush-meets-with-recipients/bush-meets-with-recipients.jpg?size=500&imageId=2819457″ width=”228″ height=”288″ /]
Who took this darn picture anyway, I’m only smiling because I just won the Nobel Prize
According to Paul Krugman and other liberal economists, the current state of the economy calls for more government stimulus (and the initial stimulus was insufficient). They acknowledge that such additional stimulus will add to the deficit, but in the short run that is not bad and the deficit can be dealt with later when things are better.
Ok, so let us say we buy that idea (which is a leap of faith).
At the same time, the Administration is saying that it will allow the Bush tax cuts to expire for the top earners, presumably those earning more than $200,000 or $250,000 for a family.
It is well known that these Americans pay the bulk of taxes already, about 40% of all taxes. However, here is the important point, they also account for about 30% of all consumer spending in the US. Granted, in a few cases it may be spending on refurbishing the yacht or second home, or it may be a lavish vacation or even a leased jet for those at the very top, but one thing is for certain, this kind of spending has a ripple effect in stimulating the economy. It keeps people working.
Leaving the current tax rates in effect does not add to the deficit, but does make it easier for people to spend more thereby stimulating the economy. More government stimulus does add to the deficit and may or may not stimulate the economy, but certainly does not stimulate anything in a very lasting or efficient way.
[picapp align=”none” wrap=”false” link=”term=barney+frank&iid=9397593″ src=”http://view.picapp.com/pictures.photo/image/9397593/president-obama-signs/president-obama-signs.jpg?size=500&imageId=9397593″ width=”152″ height=”204″ /] Hey Barney, did you hear someone whisper “unintended consequences?”
Barney Frank wants the “wealthy” to pay their fair share, but what we need is for them to spend their fair share and beyond. Billions spent on fixing roads has not done much for the economy other than to make it harder driving from here to there, why make it harder for the people who can, to spend and spend?
It is unfortunate that politicians are more worried about their public appeal and what plays well on the evening news, than in solutions that actually make sense.
Here is more logic for you, the current tax on dividends is 15%. This too will change on January 1, 2011. It may go to 20% or some would have dividends counted as ordinary income. With interest rates near zero and savings accounts paying nothing (which has a devastating impact on many people on a fixed income), is now the time to raise taxes on another source of income counted on by many seniors?
I too am very concerned about the national debt, I want to see the deficit reduced, but isn’t it counterproductive to do that by taking from Americans who are the only ones who can bring the economy back. Rather shouldn’t we be cutting spending of all kinds? I have heard numerous times over the last year that Americans spending beyond their means was one of the causes of our current meltdown; can government doing the same be much different?
QUINNSCOMMENTARY 
You have to be kidding, “the biggest single reasons that foreign companies are more competitive are that they don’t have to contribute toward either health care or pensions because their governments do.” The governments do, you mean like Greece and Spain? Governments don’t do anything expect promise what is not affordable and then tax and tax to try and make it happen and if they are too irresponsible you get massive debt.
There is no free lunch and if you keep taxing and spending you merely become a mediocre society.
First, please define wealthy. It is a Bill Gates or a couple each earning $125,000 as the Obama Administration defines it? People don’t roll out of bed when they turn 18 and suddenly become wealthy, they earn it, they work for it, they take risk for it and usually over many years.
Sure there are people who always need assistance and they should get it, but wealth transfer is nonsense. What is important is making sure that each person has a fair and equal chance to get ahead and after that the choices they make in life have their own consequences. We should invest in education and training and technology, but to say we simply soak the rich to give to the middle class is a formula for getting nowhere fast.
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From ABC world news:
In 2000, when President Clinton left office, the U.S. was in the black by $236 billion. At the time, number crunchers projected a surplus for at least 10 years.
But just two years later, we were in the red by $158 billion. The aftermath of 9/11 effectively froze the nation’s economy. And President Bush enacted his first round of tax cuts.
By 2004, the deficit had more than doubled, to nearly $413 billion. The U.S. had invaded Iraq, and, economists point out, there was another round of tax cuts.
By the end of 2008, the banking system was near collapse. Bush signed a $700 billion bank bailout package, and the deficit grew to $438 billion.
Then Obama took office and soon enacted the $787 billion economic recovery plan. That brings us to $1.4 trillion in debt…and still counting.
Biggest Since World War II
“What started out as a trickle in 2008 turned into a flood in 2009,” said Robert Bixby, the executive director of the Concord Coalition, a nonpartisan organization that seeks to end federal budget deficits. “Neither party can wash their hands of responsibility. The current administration has adopted a lot of those same policies, so frankly, I don’t think you can point partisan fingers.”
In fact, to put it in perspective, the U.S. currently has the largest deficit since World War II, and as economists point out, we’re not in world war now.
You’ve certainly heard the warnings about future generations paying the price. Bixby says it’s not just rhetoric.
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“Trickle down economics” is a discredited theory. George I properly called it “voodoo economics” in the 1980 Republican primary. It did not work under Reagan except to hugely increase the deficit. It did not work under George II, along with two wars paid for in emergency spending bills and not in the regular budgetary process the massive tax cuts drove the economy into the dirt.
The period in US history with the highest top bracket personal income taxes, with the exception of the final two years of WWII which was 94%, was:
1951 – 91%
1952-1953 – 92%
1954-1963 – 91%
The recent period with the lowest top bracket income tax was 28% in 1988 – 1990 prior to that, and lower, was:
1925-1928 – 25%
1929 – 24%
1930-1931 – 25%
and 7% in 1913-1915, the first 3 years of the modern income tax.
What can we derive from this? A number of things. First, we know from other sources that prior to the Income Tax the primary sources of government revenue were the excise tax and tariffs on imported goods. If we look at the dates when the wealthy have been treated favorably in terms of income, these immediately precede severe recessions and the depression (I would contend that we are just barely not in a depression now). Also, your primary argument is flawed, and friedman and the Chicago school, and the Republican Party are also wrong based on facts, the wealthy do NOT spend and spend. I have known, and been employed by wealthy people, they spend as little as possible and maximize savings. This doesn’t help the economy at all, and it certainly doesn’t help unemployment situation. If capital is to do its job and bring a tur around in the economy it needs to be injected at the point where virtually every cent of it will be spent simply because it has to be spent for rent, groceries, gas, insurance, car payment, child care, etc. The wealthy spend for these things too, but they have huge amounts of money left over afterward. And unlike your dream, they aren’t buying many yachts or limosines. Money given to the unemployed, or paid to the poor in jobs programs circulates immediately through the economy, creating more jobs, helping small business.
Conservatives have this exactly backwards.
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So I guess that strategy is all working out just fine.
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By “that strategy” I take it to mean injecting money at the bottom while siphoning some off the top. It might be working if it was being used, but the fact is, that it isn’t.
Republicans and their ilk continue to wail about the Stimulus, forgetting that it only passed after being reduced by a third and having a third of the remaining package diverted to tax cuts.
If we want to rebuild the economy we need to rebuild the middle class. The way to rebuild the middle class is:
1. extend unemployment.
2. penalize companies who move jobs overseas.
3. tax the rich.
4. single payer health care.
Number 4 deserves some commentary. the biggest single reasons that foreign companies are more competitive are that they don’t have to contribute toward either health care or pensions because their governments do.
5. increase estate taxes on estates > $5million, this should be well above the value of the estate of a small business owner.
6. raise taxes on dividends. The poor and the middle class don’t receive much by way of dividends which are taxed at the marginal rate of the bottom income tier. Including Dividend Income, the Wealthy pay less of a percentage of overall income than the poor.
Am I advocating Income Redistribution? Yes. To an extent. The disparity of wealth and income between the top 5% and the rest of us is unhealthy and unsustainable. Sooner or later people are going to figure out that they have more in common with each other on the basis of poverty than with the wealthy on the basis of race. And the more poor people become the more desperate they will be and the less wedge issues will matter.
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Bush did a lot of irresponsible spending no doubt about it, but that little to do with today’s problems, less than half in fact. Politicians talk a good game but they are all the same. Bush puts I’m an unfunded Medicare drug program and the Democrats complain and then in the middle of economic crisis they justify making it worse by expanding the benefit.
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One other thing, the people that pay 4o percent of the taxes own 97% of the wealth so they are actually being cut a huge break, whicle the people who own 3% of the wealth pay 60% of the taxes. Get for real!
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Are you blind or did you not know that the massive tax cuts given under Bush only drove the economy into the dirt not built it up. This is the lunacy of the republican party, that inspite of the facts “we’ll just call it the way we want to see it rather than the way it actually is.”
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