GAO: “USA is living beyond its means”
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32 Responses to “GAO: “USA is living beyond its means””
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I don’t think he ever mentions tax breaks for the rich as the primary source of this $26.0 trillion INCREASE during the Dubious (mal)Administration.
One way to generate the extra $222,000 per household needed to pay for the give-away would be to encourage immigration, so as to add more able-bodied workers to the labor force without having to pay for their education and healthcare during the unproductive (economically speaking) childhood years.
Another way would be to pledge never, ever again to vote for Republican’ts.
David,
I wrote a short column in a local paper about the Reagan era tax cuts a couple years ago.
No one believed me.
If you were making $100,000 per year before Reagan, Reagan doubled your take home pay without demanding an increase your productivity.
I did the math for them as well.
Before Reagan, the tax rate on $100,000 was 70%. So you took home about $30,000.
After the Reagan giveaway, you were taxed 33%. So you took home $67,000.
That was true for anyone making $100,000 and UP.
While people in the bottom brackets got one 5% cut.
Ever do the math on 5% of 16%?
EIGHT TENTHS of a percent.
So, if you were making $24,000 in 1980, you got a tax break of at max of $192, assuming neither taxpayer got any other deductions.
So, the debt went up 270%.
The rich got double the take home pay. A 100% increase.
The average Sally and Bob got .008% increase in take home pay.
Nobody gets the math.
They stop listening IF they are ‘getting’ something for nothing.
The classic ‘American’ slogan. As long as I get mine… Screw everybody else.
Mad Dog,
The rich pay more then their fair share of taxes and we currently have 40% of the US population who pay no income taxes.
If taxes are the answer to a prosperous nation, then why are previously high tax/socialists countries abandoning high taxes for lower taxes and subsequent economic growth? Because they have learned from the policies of Reagan (the Laffer Curve) and are instituting these fiscal policies to spearhead their growth. The proof is there before your eyes and to deny such is to acknowledge that you prefer a Marxist/socialist economy in contradiction to the visions of our Founding Fathers.
David
re: #1. Massive immigration to solve our problems and pay the bills, eh? Of course this looks great from the “business school” perspective, but some of us with a more well-rounded education might call this an “AI” (awful idea) And p.s. here’s where I got my Bachelor’s (in Economics)
http://www.franklin.uga.edu/index.html
hoads,
Don’t waist your breath, er..fingers, on mad dog – he loves the idea of redistribution of wealth.
hoads,
The Laffer Curve remains a joke.
Serious economic analysis of Reagan and his use of the Laffer scenario show that the plan cost the country trillions of dollars. Over 3 percent of GDP in the first two years.
MD
Aubrey,
Capitalism is the redistribution of wealth.
No matter how you define wealth.
Prove me wrong.
MD
FROM ADAM SMITH
Capitalism is the redistribution of wealth?
Yup! Course it is better than socialism which is also the redistribution of wealth and worse than capitalism.
As more and more ex-socialist nations as well as socialist nations cut taxes, leaving us at the top with Japan, we will continue to see “wealth redistribution” go to international companies that are operating in those countries and to companies and nations and people using capitalism, sometime ruthless capitalism, to rise out of poverty.
The laffer curve is true but is nowhere near a bell curve nor is it of any use if tax cuts aren’t combined with the other reforms needed to cut prices of U.S. made goods and services.
All the Reagan to Bush tax cuts have done, for the most part, is drive more spending to imports and drive more profits to the largest and strongest international companies.
It isn’t the tax cuts and whether we get them or raise taxes. Without the reforms that are needed, we can’t continue on this fiscal path we are on regardless of which party is in power.
David, regarding immigration, we won’t have the jobs for them if we don’t get the reforms we need. Right now, if we continue on this course, the retiring 78 million won’t require mass immigration to replace. We won’t have the jobs for the replacements if this trend continues.
Congress is trying to do what you suggest, however. Their plan to move quotas from one million to 3.4 to 5 million a year over the next 20 years is based on exactly what you suggest. That will add 1/3 to our population with children they and current citizens have in that 20 years and that will mean we need 1/3 more power grids in a nation resisting growth in that area. 1/3 more energy in a nation already too dependent on foreign energy, 1/3 more schools in a nation with declining education, 1/3 more cars in a nation trying to cut that use, 1/3 more water and sewer systems in a nation facing water shortages in several areas, 1/3 more prisons in a nation with skyrocketing incarceration rates (30% illegals), 1/3 more food in a nation with rapidly rising food costs (thanks ethanol), 1/3 more government services in a nation that want less taxes and more services, 1/3 more of everything else in a nation that can’t keep up with the world now.
Growth through immigration is only going to work if we get the needed reforms that let us compete with the world market that is using capitalism to eat our lunch.
On a different note, but having to do with government and the current problems requiring reform, I like this I got in an email.
quote:
“On one end of the dusty street stand five outlaws: the Federal Reserve, the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank. On the other end of the street stands the monster that they created and nurtured in their global lab. The outlaws have opened with a barrage of bullets. But the only bullets they have are made of the monster’s very substance: debt. Every bullet that hits him only makes him stronger. And now the monster is beginning to draw his gun, and it’s a bazooka. He is taking aim. The monster is about to overcome his makers.”
– Bob Prechter,
David, also remember that the bulk of the $22 trillion increase has nothing to do with any tax on the wealthy or tax cut on the wealthy. Almost all of that is due to payroll tax shortfalls for social security and Medicare not anything to do with other taxes. Social Security admin says 16% increase for S.S. and 122% increases in Medicare tax revenues (pay roll taxes) are required to keep them solvent and deal with that $50 trillion unfunded liability. But workers don’t want more tax and they don’t want a cut in benefits (13% for S.S., 53% for Medicare if the tax revenues aren’t increased). If we are going to change how they are funded, using the “wealthy” and make the true welfare programs, then it will be met with a lot of resistance too.
So whether we raised or lowered tax on the wealthy, we still face what is now not what he listed in the video but the $50 trillion ($59 trillion counting state shortfalls for pension and healthcare promises) and $400,000 per full time worker in their latest report to Congress.
http://www.gao.gov/new.items/d07362sp.pdf
The latest report I have seen
The Nation’s Long-Term
Fiscal Outlook
August 2007 Update
Still says deep doo-doo is what we are in.
Jan Paul,
Now we have another topic.
Laffer curve as a joke on America. I think we agree.
The man has had some twenty five years and has yet to publish a formula, any math, or documentation on the specific relationships he asserts.
Painful way to die.
MD
Now I’ve been thinking about how to explain capitalism, which Marx has already done to death.
Marx is the best source ever on capitalism. No one has written as much or as well as he did.
All wealth comes from individual human life.
Each individual is born with the same potential wealth.
Capitalism redistributes that from as many as possible to as few as possible.
And you all think socialism is unfair.
MD
I watch him frequently on Kudlow and haven’t been impressed.
One of his main critics admits that there is truth to the theory but, as applied by this administration, is a joke. Maybe you remember his name but, the point is that without meaningful data that actually applies to more than “would have, could have, should have,” theory, what good is it.
In the laffer curve, and as his critic point out, conditions have to be right for it to apply and those conditions aren’t there with the types of tax cuts they are using, the types of spending (mandatory increases tied to COLA) and current economic conditions (war spending, Homeland Security, Prescription drug, etc.) to allow “growth” to keep up with additional needed tax revenues.
The problem Congress faces, however, is workers want lower taxes at both the state and federal levels, the wealthy have loopholes, tax free securities, foundations, offshore accounts, foreign investments, etc. and business passes their taxes and compliance costs on to the consumer.
So, what is Congress going to do? Stall, make changes that accomplish little but make them seem like they are doing something, accuses, blame China, business, wealthy, etc. And both parties will do it.
With the world lowering taxes and doing reforms to raise tax revenues, some are actually using the laffer curve theory but, only when it works and only with other reforms that allow the growth to keep up with rising demand for tax revenues.
Larry Kudlow’s “Goldilocks economy, (not too hot not too cold)” may be finding the economic, laffer tax cut, we can overcome, pour on the spending, porridge getting cold.
Hope I am wrong on that. Our nation’s individuals for the most part are too deep in debt to handle a recession very well.
Jan
GREAT LINK ON POST 12 all should read !
Mad Dog. I think capitalism is very unfair. It favors the educated, the networker, the skilled, the monied, the lender over the debtor, the more intelligent over the people who though no fault of their own are not as intelligent.
The only systems I know of more unfair are totalitarian governments and socialism.
Socialism, of course is unfair because it removes the incentives needed for a strong nation, defense, economy, and high standard of living. It is based on good intentions and often the false belief that their is inherent good in man. It is designed for the lazy, incompetent, and uneducated because it takes from the productive members of society and gives to the unproductive. Eventually more and more of the productive decide to drop out of the productive roles and join those just taking from society.
As John F. Kennedy says, “ask not what your country can do for you, but what you can do for your country.” However, he should have added, and you will be rewarded in proportion to what you contribute.
Now, for over 100 years we really haven’t had “capitalism” in the healthy since. We have done exactly what socialists have said by congregating the power in the hands of the Banking elite, corporate barons, internationalists, and the “criminals” that use unethical and illegal business tactics to gain both business and political power.
What is happening is exactly why nations turn to socialism. It is why, if we continue, there will eventually be a “people’s revolt.” But, what they come out of that revolt with won’t be any better for very long.
Also, remember that having regulation, social programs, and even what some would cry is “protectionism,” is not socialism if their isn’t the centralization of power and redistribution of wealth. As long as we as individuals equally share in the cost of social programs that we want, that isn’t socialism but simply self-government where we decide what we will have and what we will pay for without borrowing.
As long as we do it in a way that can compete internationally and not drive business or the wealthy investors out of the nation, we can have any social program we want.
However, in order to have that we are going to have to first hit bottom and have a “revolution,” all right, but one that returns us to a Republic where each state can run on its own government and where good government isn’t penalized by having to pay for bad government in other states.
Fair? Nope! Won’t be fair at all. No society has ever been created nor will be created that can be fair to more than the majority. Any society that tries to be a “one-size-fits-all” will fail because the majority won’t like it and the majority have to like it to be productive.
At least in a Republic, we can have many societies where people can choose with one suits them best and live in it. Thus, the liberal can have their society and the conservative theirs and the moderates theirs. Then on the few things they have in common, they can deal with them through the federal government, like defense resolving interstate disputes, international agreements and treaties, monetary policy.
Also, if a state wants to be “capitalist,” it can be and if a state wants socialism it can have it and we can see which state become the most popular with the majority of citizens that work for others.
As we see more and more wealth move to nations with lower costs and better business incentives, I believe we will see the U.S. and the “capitalists” who have forgotten that working men and women have to meet their needs to be contented workers, will fade more and more.
And the leaders in both parties that cater to them, will also see their power fade and a new third party rise and replace both of them. As you know the Democrats are equally in bed with corporatism as are Republicans, Different in some cases but usually, both rely on many of the same corporations for their campaign money. Also, both party’s leaders are involved in the CFR, World Bank, Bilderberg, Trilateral Commission, Saudi family, China connection, etc. Regardless of who gets in power, the wealthy will have their trusts, foundations, international sources of money, offshore accounts, and tax free securities to protect their wealth with. Both party’s leaders use those protections and will continue to do so just as many of the “party connected,” socialist nations have the ability to protect their wealth. Also in those countries, those who don’t have the connections leave if they can’t protect their wealth. France is losing a millionaire a day to lower tax nations.
Our system of capitalism is referred to as “zoo capitalism” by the Rude Awakening.
quote:
And even if they saw they weren’t actually richer…they believed the
promises of modern ‘zoo capitalism.’ Since the Reagan/Thatcher revolutions,
people have come to believe in a new kind of capitalism – in which the
dangerous beasts were all behind bars. It was Capitalism Without
Fear…growth without recession…boom without bust…creation without
destruction. It was capitalism presided over by central bankers – with the
power to set the price of money wherever they want. Deficits didn’t matter,
To Err is Human
So, no argument capitalism, especially our version, is becoming more and more unfair to the average working man and woman but almost all of it can be trace to abuse of common sense, tax paying demanding programs they won’t pay for, politicians saying one thing and doing another in both parties, (like saying they are against a war they continue to fund) and “we want a strong dollar” and we want a “secure border,” and we want “free trade” when we aren’t competitive in free trade, etc. On and on we see policies from both parties that make no sense for the average working person.
The Socialist Party of the U.S.A. has posted their principles and strategy on their website. Another site has reposted them with a critique on them.
Socialism As Radical Democracy
The SP Statement of Principles
When one actually reads what they say, they can see how foolish they are. They have taken “truth” and “good intentions” and destroyed any chance of workers ever having the ability to reach their nation’s full potential.
I don’t see how people can disagree with the basic premise of the laffer curve:
0% tax rate > 0% revenue.
100% tax rate > 0% revenue. (because the normal person isn’t going to work for ZERO.)
Bill the dispute is the “shape” of the curve (not a bell) and where we are on it.
Also, we have this problem. We want more social spending than we are willing to pay.
Thus, if you don’t raise tax revenues, you don’t get the money and have to borrow. If you cut taxes but cut them in the wrong places it doesn’t create the growth or at least not the type of growth that would expand profits and wages enough to grow tax revenues more than the decline in rates shed.
It requires reforms and it requires real growth, not growth from government spending to artificially raise GDP. It also requires accurate reporting of inflation so we have a true picture of growth.
Tax cuts can increase tax revenues as proven in nation after nation but, you have to examine the tax code they use, the regulation they have, the business policies they have, the tax on the population, the wages and growth in wages that would increase tax revenues from that source, etc.
Bill,
There are several disputes with the Laffer Curve, including IF such a thing exists.
The basic premises in my opinion is faulty.
I don’t refuse a job just because making more money means paying more taxes.
Now, you might not see that as the basic premise.
‘More taxation means less economic activity.’
Know anybody who refused a raise in pay because they would pay more in taxes?
Hell, every raise in pay means more taxation, all other things being equal.
That is what I see as being the back breaking flaw.
Then comes the lack of proof.
Where is the proof of a ’cause and effect’ relationship between government revenue and increased economic activity?
I’m not talking about a “Well, I think there is.” Or, a “Well, I think there isn’t” type of thing.
I want a mathematical formula that says: In the past, for each percentage of a federal tax decrease, general economic activity in the following private sectors increased this ‘percentage.’
Now, that hasn’t happened yet.
We might be able to find increased profits after a tax cut. But, can we find a cause and effect relationship that excludes all other possible explanations?
No.
When we look at the real growth rate of 1971 to 1979, we have real GDP annual growth at 3.60% And, real GDP per capita at 2.54%.
1981 to 1989, real GDP annual growth was ONLY 3.52!
Where the freaken HELP was the boost in economic activity from the VooDoo tax cuts?
I remind you that the CPI increased 7.57 in the earlier period compared to 3.96 in the latter period.
Nominal GDP was 10.82% in the 70’s compared to Nominal GDP in the 80’s at 7.27!
Again, where’s the flappen boost in economic activity?
And, when we adjust real GDP for the huge increases in government debt, the 80’s look like 1929!
Someone end the madness over the Laffer Curve. It just doesn’t exist.
[BTW, wives work for free. Ask yours.]
MD
Big Bird
How about a system where those of you who think the Laffer curve is “voodoo” economics get to participate under your solcialist theme? Clearly you think solcialism, despite volumes of data to the contrary, is the perfect form of government, so I recommend all those who WISH to pay higer and higher taxes do so and leave the rest of us alone.
Here’s a good story for you Big Bird;
An avowed, ultra-liberal democrat-supporting college aged girl comes home from school following finals and tells her conservative dad she’s carrying a 4.0 GPA, but her friend, who parties on a daily/nightly basis, is barely managing to carry a 2.0 GPA. The dad says “why not give your friend one point from YOUR GPA so both of you will have a 3.0 GPA?
The daughter angrily replies “GIVE her a point? Why should I, who’ve worked so hard and busted my tail to earn these grades, give away what I’ve rightfully earned?” To which the dad replies, “Welcome to the Republican Party.”
“The daughter angrily replies “GIVE her a point? Why should I, who’ve screwed so many old professors and gave away my tail to earn these grades, give away what I’ve rightfully earned?” To which the dad replies, “Welcome to the Republican Party.””
x-sgt mac,
If you don’t know the difference between a story and a joke, you’re a joke.
MD
and during those wonderful Reagan years, taxes for the middle class were raised.
Welcome to socialism.
That’s it Big Bird. Don’t bother with anything as trivial as the truth. Just keep posting you usual rantings.
You know it’s almost refreshing to read your drivel. It reminds me just how fortunate we were to have a man like Ronald Reagan at the helm when the Country so badly needed him.
Don’t forget to thank a veteran Big Bird…..after all, they’ve sacrificed for cowardly little girls like you and you owe them your thanks.
I’m glad I don’t have a man like you behind me.
Big Bird
You forgot to say “thank you.” An oversight perhaps?
You also forgot to mention a few small things about Reagan;
1. Ended the Cold War
2. Lowered taxes and increased revenues (Yes, I know you believe the other side of this, but it’s simply not the case.
3. Shattered the Soviet Union.
4. Made people proud to be American unlike your friend slimy slick Willy.
5 and up – He was a Patriot and the MOST popular president in American History.
Now I know that bothers you Big Bird, so let me say this….
GOOD!
1. Extended the Cold War by not accepting the offers of Mikhail Gorbachev.
“On April 8, 1985, he announced the suspension of the deployment of SS-20s in Europe as a move towards resolving intermediate-range nuclear weapons (INF) issues. Later that year, in September, Gorbachev proposed that the Soviets and Americans both cut their nuclear arsenals in half. He went to France on his first trip abroad as Soviet leader in October. November saw the Geneva Summit between Gorbachev and Ronald Reagan – … no concrete agreement was made, …
January 1986 would see Gorbachev make his boldest international move so far, when he announced his proposal for the elimination of intermediate-range nuclear weapons in Europe and his strategy for eliminating all nuclear weapons by the year 2000.” From the biography of Mikhail Gorbachev.
Reagan, other than making cheap loans and selling wheat to Russian, never acted on the offers by MG.
2. Increased taxes from 14% to 15 percent on the middle class. Increased the take home pay for ‘millionaires’ by 250 by cutting the tax rate from 70% to 28%. Forever shafting the middle class with a matching 270% increase in the federal debt. For all your BIG mouth, you’ve never provided any facts.
3. The Soviet Union didn’t shatter. It crumbled from internal rot, which started showing in public in 1985. Three huge words.
Glasnost
Perestroika
Chernobyl
Add Afghanistan and uskoreniye, shaken, not stirred, and you have the real reasons for the slow demise of the Soviet Empire.
4. All the more pity for you that you couldn’t be proud of your country without a B movie actor to show you the way …
5. Reagan is a popular as your hemorroids at the Greek sauna where you lick the urinal clean.
I’d thank you, but I don’t mingle with the ‘uppity hired help.’
But, if you in particular, ever give your life in service to your fellow man, I promise to attend the funeral. My hand full of dirt will be the first one.
But, by all means, enjoy yourself. Nobody else does.
Bird in your face,
MD
Big Bird -
You really do need to get out more. All that time hiding behind monitors and keyboards viewing the latest gay porn movies and smoking dope has killed any remaining brain cells you had!
Your “facts” are consistently wrong, and ALWAYS gleaned from the MoveOn type “sources.” However, I’ll give credit where due; in typical cowardly, leftist fashion, your primary consideration is to call people names rather than actually debate the facts.
You’re a sad little man Mike. I hope Santa brings you some courage this year. Oh, and a few new brain cells. You could do with both. Merry Christmas!
Hey Big Bird……Here are the REAL facts on Reagan tax cuts. Please take note.
“Tax cuts do not create federal deficits; greater government spending does.” That is the message tax-cut supporters must hammer home, according to political analysts and economists. Otherwise this truth will be drowned out in the media in a deluge of confusion.
Politicians are expected to repeat the mantra, “Reagan tax cuts were responsible for declining revenues and soaring deficits in the 1980s,” but no such thing occurred, according to budget analysts.
Receipts from individual income taxes rose to $446 billion in fiscal 1989 — President Reagan’s last budget — from $286 billion in fiscal 1981, the year Reagan began to slash personal tax rates — a 56 percent increase.
Annualized, tax receipts grew faster than that period’s 4 percent inflation.
During the same period, federal spending rose from $678 billion to $1.143 trillion — a 69 percent increase.
From 1981 to 1983, personal income tax receipts rose 1 percent — while spending surged 19 percent. This was during a bad recession. After the recession, the Reagan tax cuts worked and revenues soared.
From 1984 to 1989, growth in personal tax receipts outstripped growth in spending, 50 percent to 34 percent.
And the deficit fell from 5 percent of gross domestic product to 2.9 percent.
After 1989, the deficit ballooned again as revenues dried up following an increase in tax rates.
From 1989 to 1993, personal tax receipts rose just 14 percent, while spending rose 23 percent
Then there is the evidence of the beneficial economic effects of President Kennedy’s tax cuts.
In 1964, the economy grew by 5.8 percent — followed by 6.4 percent growth the following two years.
The increasing tax revenues following from the surging economy led to a balanced budget by 1969 — the last time that the government was able to balance its books.
But either sloppy thinking or purposeful confusion perpetuates the myth that tax cuts produce higher federal deficits.”
Source: Editorial, “The Supply-Side Deficit Myth,” Investor’s Business Daily; and Donald Lambro, “Unstrung Tax-Cut Lamenters,” Washington Times, August 12, 1996.
Looks like things went a bit wrong due to a democrat-controlled congress that just couldn’t stop spending. Oh one more thing Big Bird,
here’s a soldier’s perspective on the cold war. Unlike you, he has some guts. I value his opinion far more than I do yours.
http://www.humanevents.com/article.php?id=23171
Merry Christmas Mike Parker!
Quoting an editorial as facts, hey ex sgt?
“The increasing tax revenues following from the surging economy led to a balanced budget by 1969 — the last time that the government was able to balance its books.”
Books were balanced in 1999. Never balanced under your butt buddy, Ronnie.
“Looks like things went a bit wrong due to a democrat-controlled congress that just couldn’t stop spending.”
I’ve posted those numbers before, my Hemorrhoidal Hero.
Reagan wrote 8 budgets. Over those 8 budgets, he asked for $7.357 trillion dollars. You can pull his budget messages and verify that.
http://www.reaganfoundation.org/reagan/resources/
That’s a direct sources, not some hack writer drooling out his love for Reagan to keep his job.
You should use the keywords, Message to the Congress Transmitting the Fiscal Year ____ Budget. Just fill in the years for the budget.
Notice too, Reagan included gains from SS in his budget messages even though SS was an off budget item.
Since SS had then as it does now, a huge surplus, his numbers are misleading.
But, since you the the know it all on economics, buttgets, and Reabuns, you already know that.
Congress approved his ‘budgets’ with only an additional spending during the entire eight years of $197 billion.
Your buttbuddy, Raybunns shafted the taxpayer at the end of eight years with a new debt total of $2.7 TRILLION.
Congressional spending, above the requested budget for eight years?
About 2 percent …
And, who passed the largest tax increase of our life times?
Ronald Reagan.
Look it up. TEFRA or Tax Equity and Fiscal Responsibility Act of 1982. “The largest peacetime tax increase in the history of the United States.” (Bruce Barlett in the National Review Oct. 29, 2003)
You should also read, “Revenue Effects of Major Tax Bills,” Office of Tax Analysis, United States Department of the Treasury.
Under Reagan, there were nine changes to the tax code. SEVEN WERE TAX INCREASES INCLUDING TEFRA.
As the the effect of the Reagan buffoon or Laffer Curve?
The federal government of the United States lost tax revenues equal to 4.15 % of GDP in the fourth year. 3.58 % of GDP in the third year … etc etc etc…
Loss of revenue from his Laffer curve.
Seven tax increases to increase revenue. AND still revenue lagged trillions of dollars behind HIS SPENDING.
Look up some reality.
If you need some help, We’re all here for you. We feel your pain.
You can also look up real budget numbers at
http://origin.www.gpoaccess.gov/usbudget/
But, the most accurate numbers on what Reagan wanted to spend are the words that came right out of his lying asked mouth.
However, since you live in awe of yourself, and not those honorable warriors who gave everything for their country, I don’t see really see any reason for wasting spit on you.
MD
p.s. The only guts you have are hanging over your belt.